DUBAI, Oct 8 (Reuters) - National Agricultural Development Co (NADEC) has agreed to start merger talks with Al Safi Danone Co (ASD) that will be executed through a share swap deal, the company said on Sunday.

Under a memorandum of understanding, NADEC will buy all shares of Al Safi Danone Co and in exchange offer new shares to ASD’s shareholders, it said in a statement.

NADEC has a market value of $692 million, while ASD is a joint venture between Saudi Arabia’s Al Safi Group of Companies and French food company Danone. ASD is engaged in the production of fresh dairy products and juices.

The term of the MOU is for a period of six months.

The parties have agreed on an exclusivity period during which they will conduct financial, commercial and legal due diligence, the NADEC statement said. (Reporting by Saeed Azhar; Editing by Michael Perry)